Thursday, 30 October 2014

In its latest Global Cities 2015 report, real estate firm Knight Frank
has highlighted five technologies that will likely change the property
sector.

It is remarkable to think that just five years ago no one owned an iPad (launched in April 2010), illustrating how quickly new technology becomes taken for granted today.

This is an example of a technological advance that has accelerated
changes in how we work, shop and spend leisure time, with implications
for commercial real estate. Some, who previously shopped regularly for
books, CDs, DVDs, and video games, now access all these products through
their tablet computer.

This has contributed to a reshaping of retail property, and sparked a
wave of office-based start-ups that produce apps. Similarly, the
popularity of e-shopping has buoyed demand for warehouses. New
technology undoubtedly impacts the property market, raising the
question, where will change come from next.

Office robots

Development has begun on telepresence robots, whereby a remote worker
can log into a droid, traverse the office, see what is occurring, and
speak to colleagues. Cleaning robots at home have already taken off. An
office service robot that cleans, reloads printers, and performs basic
security duties, could be a future extension of this technology. Future
office buildings may need storage, recharge and service areas for these
droids.

The internet of things

This is where everyday appliances are connected to the internet, so they
can be controlled remotely or intelligently monitor how we use the
device. For instance, a fridge could monitor its contents, and send the
homeowner a suggested shopping list to his mobile phone with a ‘buy’
button. This would add momentum to the rise of e-retail, increasing
demand for logistics property. Internet-linked machinery could also
result in smart office buildings that partially manage themselves.

Drones

When Amazon
rolled out plans to deliver small goods by drone helicopters there was
initially a sceptical reaction. However, other firms quickly announced
they too were testing drone delivery. In the future, logistics
properties may come to resemble mini-airports, as drones come and go.
EasyJet, the airline, has plans for its maintenance crews to use drones
for aircraft inspection. Similarly, the property industry could use
drones to inspect buildings.

Driverless car

A computer driven car, using wi-fi to communicate with other vehicles
and receive traffic reports, should improve traffic flow and speed up
commuting. The result will be a better quality of life in office
districts, as efficient traffic movement allows more streets to be
pedestrianized, improving public areas and passing trade for retailers.
The city will become a more pleasurable experience encouraging people to
work, live and shop there.

3-D Printing

3-D printers are being used more often for producing components, but
those parts then need to be assembled into a working product, which will
require quality control testing. This requires a factory. However, in
R&D and specialist manufacturing, 3-D printing is having an impact,
bringing down costs on short production runs. Consequently, we could see
a wave of ‘start-up’ manufacturers offering bespoke or specialist
goods, generating more demand for light industrial units.

Wednesday, 29 October 2014

How successful entrepreneurs can give back to their younger counterparts

JUST as it takes a village to raise a child, it also takes many different players in an ecosystem to raise a successful startup.

And one of the most valuable players in the startup ecosystem are those who have walked the path of an entrepreneur and succeeded in their own right. These players have a wealth of experience and expertise as well as capital to plough back into other budding startups.

Most times, they invest in the capacity of an angel investor.

By definition, an angel investor is an affluent individual who is willing to invest in a company at its earlier stages in exchange for an ownership stake, often in the form of preferred stock or convertible debt.

They typically fill the gap in startup financing between seed funding, likely provided by friends and family, and formal venture capital funding in later stages once the startup has gained some traction.

Angel investors are usually entrepreneurs themselves and have successfully cashed out of their ventures with deep pockets to spare.

Over the years, scores of entrepreneurs, who have tasted hard-earned success, have increasingly been giving back to the ecosystem by reinvesting their time, money and knowhow into other startups.

Unlike other sources of funding such as government grants and venture capital funds, the angel investors’ involvement in startups is vital given their experience in building successful companies.

This would enable new startups to tap into their network and expertise, giving them a higher chance at succeeding.

As some entrepreneurs note, “one entrepreneur betting on another is a great validation of the idea.”

Some Malaysian entrepreneurs who have made their mark in the startup scene have sowed back into the ecosystem. They include the likes of Azrul Rahim, founder of application launcher for PalmOS, Facer, and Mark Chang, founder of JobStreet. com, who recently expressed interest in backing entrepreneurs from underprivileged backgrounds.

Notably, like every investment, there are risks involved when investing in early stage startups.

To recap, startups are experimental by nature and therefore are meant to fail several times before they succeed. As such, it is important that angels understand that a high percentage of the startups they invest in may likely fail.

However, as with other types of investment, angel investors should have a portfolio of high growth startups to invest in. And in that basket of startups, a gem or two will return a big reward.

Take Berjaya Group’s Tan Sri Vincent Tan, for example, who is known to make quite a few bets with budding companies.

While not all of them have been known to be successful investments, Tan certainly uncovered a jewel in MOL, which he bought for US$3.2mil (RM10.5mil) in early 2000s and listed on the Nasdaq this year. He reportedly pocketed a cool US$200mil from the listing exercise.

The government is also increasingly encouraging more early-stage private investment in startups with the introduction of the Angel Tax Incentive, which is administered by a unit within Cradle Fund Sdn Bhd.

Angels who are eligible for the incentive are high net worth individuals with total wealth of more than RM3mil or high income earners with gross annual income of more than RM180,000.

Angel investing is indeed becoming more visible and formalised with the formation of networks that connect entrepreneurs and angels.

Most recently, local entrepreneur-turn-investor Khailee Ng, who co-founded GroupsMore and SAYS. com, was made managing partner at 500Startups. Through the fund, Ng has invested in multiple companies across the region.

The local startup scene can indeed benefit with the involvement of more angel investors. Entrepreneurs who have achieved their milestones should think of investing in the future and giving back to younger entrepreneurs.

Entrepreneurs who have been there understand the satisfaction of nurturing another venture.

So if you have succeeded with your company, perhaps it is time to consider investing back into the ecosystem by sharing your expertise and resources as angel investors.

Malaysia has more successful tech startups than many people realise

Investor interest: MyTeksi has managed to raise a total of US$90mil in funding over the past 12 months.

Much has been said about this being the best time to launch and grow startups due to the availability of funding, infrastructure and an accommodating environment.

Additionally, mergers and acquisitions suggest that there is much value to be derived from startups. Foreign corporate moves include the US$966mil (RM3.1bil) price tag that Google paid to acquire navigation app Waze and the US$22bil takeover of messaging app Whatsapp by Facebook.

No doubt, many budding entrepreneurs aspire to follow in the footsteps of these successful startups. In a globalised market, the success of startups is not limited to those with connections to or within the vicinity of Silicon Valley.

With the right experimentation and innovation, a startup can succeed even in a risk-averse culture. It is not impossible for startups to grow rapidly and achieve high revenues in a short time.

But budding local entrepreneurs often lament that there are few local heroes to look up to in order to benchmark the ability of the local startup scene in producing successful ventures.

Although they are few and far between and are generally below the radar, there are some local gems that have scaled up very quickly, attaining regional success in just a few years, and have caught the eye of internationalinvestors.

One such company is MyTeksi Sdn Bhd. The Internet-based taxi booking service provider, which was launched in 2012, has already established a strong presence in Singapore, the Philippines, Thailand, Vietnam and Indonesia under the brand GrabTaxi.

The MyTeksi app has reportedly been downloaded onto over 2.1 million mobile devices with more than 400,000 active monthly users in six countries and more than 25,000 taxi drivers registered with the network.

Most notably, the company has managed to raise a total of US$90mil in funding over the past 12 months, counting US-based Tiger Global Management, GGV Capital and Vertex Venture Holdings as some of its investors.

One of the key reasons for MyTeksi’s success, says co-founder Anthony Tan, is its focus on solving a real social problem. In this case, providing an efficient and safe platform to match taxi drivers and passengers.

Another homegrown startup that is shaking up its field is banking solutions company Juris Technologies Sdn Bhd.

When the company was founded in 1997, co-founder and CEO See Wai Hun said its main agenda was to market a data mining system. But See quickly realised that no one was interested in data mining because people were reeling from the shock of the financial crisis.

Thankfully, she was equally quick at spotting an opportunity to create software for bad debt recovery which would help financial institutions manage their workflow with their litigation team.

Juris was set up with the help of an angel investor but See noted that the company eventually bought back its shares within a few years of incorporation. The team has grown from 10 people when it started to a staff strength of 80 today.

Its product range has also expanded from just a component of the debt recovery software to software for debt collection systems, loan origination systems, credit scoring systems, conveyancing and loan documentation systems.

To-date, 11 banks, 900 lawyers, 200 collection agencies and 100 property valuers are using its systems and See is expecting revenue to hit a high of RM30mil this year.

Most recently, Juris joined the ranks of Endeavor Global Inc’s global network of high-impact entrepreneurs, being the second Malaysian company to do so.

The achievement gives Juris access to global investor network and partnerships that will enable the company to scale up for regional expansion.

Malaysia has seen other startups, including the likes of iMoney, Softspace, FashionValet, Piktochart and TextbookAsia, take flight and achieve success in various fields.

Local entrepreneurs can take heart that some of the action does take place on our home ground. It is possible to nurture the local startup ecosystem to provide startups with a good platform to thrive and contribute significantly to the growth of the country.

With the right combination of policy, infrastructure, funding facility and mentoring, the local startup industry could unlock another key growth driver in our economy.

Tuesday, 28 October 2014

Chang: 'For the past few years, HBA has sounded the alarm on the risk of a homeless generation.'

WHEN middle income professionals are unable to afford their own home based on a single income and have to team up with either a spouse or another person to qualify for a mortgage loan, then it is a sign that the unaffordability of our housing market has become critical.

A finding by US-based urban development researcher Demographia reveals Malaysia’s residential housing market is “severely unaffordable”, even more out of reach than residents in Singapore, Japan and the United States.

Demographia’s finding, cited by Singapore’s Straits Times in a report on Oct 14, rates housing as severely unffordable if the median of house price to annual income is 5.1 times.

Malaysia clocked in at 5.5 times, showing many Malaysians continue to be locked out of the housing market, compared with Singapore’s 5.1 times, while the United States’ and Japan’s housing markets were found to be “moderately unaffordable”.

Public interest group, National House Buyers Association (HBA) honorary secretary-general Chang Kim Loong says Demographia’s report supports HBA’s own finding that house prices, especially in the urban and sub-urban areas, have risen beyond the reach of many average Malaysians.

“For the past few years, HBA has sounded the alarm on the risk of a “homeless generation” made up of a growing number of young Malaysians especially the lower and middle income groups who are unable to afford their own home. When this homeless group grows in number, it can give rise to many other social problems,” he warns.

Siva: 'The fact that salaries have not kept up with the upswing in property prices have further worsened ... the situation.'

Chang says when even middle income professionals are unable to afford their own home based on a single income, the situation has become critical.

He says unless one is willing to be tied down by a long-term or back-breaking mortgage or mortgages, the high residential prices have rendered buying a house an increasingly uphill task, if not an impossible feat for the many lower income and average Malaysians.

“The skyrocketed prices have driven house buyers to take back breaking mortgages and many needed to combine their income in order to qualify for a mortgage, thus leaving them with very little or no savings after paying the monthly instalments and other basic necessities.

“This will place families at risk as they could fall into a deficit situation if any sudden emergencies happen to either of the borrowers,” Chang says.

He points out the possibility that in the event these borrowers cannot afford to pay their instalments and the banks are forced to auction off their properties, “there is a risk of a property bubble bursting, just like what happened during the sub-prime financial crisis in the US.”

“The borrowers and their dependents will also be faced with financial and emotional crisis that befalls their foreclosed property. Foreclosures can devastate a family’s economic and social standing, leaving them poorer instead,” Chang laments.

Chang says just six years ago it was still possible for a single middle level manager earning RM5,000 a month to buy a new double-storey link house in Kajang for less than RM250,000, and for a single executive earning RM3,000 a month to buy a new condominium in the Old Klang Road area for about RM200,000.

“Today, a new house in Kajang are in excess of RM700,000 but a middle level manager is just earning RM6,000 or thereabout a month. Recent launches of condominiums around Old Klang Road area are in excess of RM600,000, while the average salaries of executives are still around RM3,500 a month,” he laments.

He believes the maximum price that households with an monthly income of RM10,000 should purchase is only RM360,000 (RM120,000 x 3x).

“HBA has always stressed that affordable housing should be priced around RM150,000 to RM300,000, and not more then RM400,000 even for prime locations. Given that annual household income uses the assumption of two working spouses, there is a critical need for properties priced at RM150,000 to cater to single families and adults.

“We urge the government to further lower the threshold of affordable house price to between RM150,000 and RM300,000, and not more than RM400,00 even for prime locations,” Chang adds.

Chang says these houses, with minimum built-up of 800 sq ft and three bedrooms, need not come with fanciful finishing, but have just the bare necessities for a family’s comfort.

Stemming the greed

Malaysian Institute of Estate Agents (MIEA) president Siva Shanker concurs that the unaffordability housing issue has become critical over the past three to four years due to the sharp upswing in house prices.

“It was driven by the low entry costs with schemes such as no need for downpayment, developer interest bearing schemes and free stamp duty and legal fees, Although the Government has introduced various cooling measures and more responsible bank lending guidelines which has brought down the number of housing transactions, prices or value of houses still remain high.

“The fact that salaries have not kept up with the upswing in property prices have further worsened the unaffordability situation,” Siva explains.

HBA’s Chang points out the risks posed by “Investors’ Clubs” or “Millionaires Clubs” which are basically syndicated speculators incorporated by some ingenious individuals.

“They work in cahoot with developers, valuers and banks. Speculative buyers may be caught by the latest round of cooling measures. How the situation will pan out will depend on the holding capability of these speculators of which most of them may not have. Come hand-over time when it is time for these “investors” to flip their purchases, there may be a shortage of buyers for these properties, most of which were transacted at inflated and not real market value prices,” he warns.

Siva opines that the imposition of real property gains tax (RPGT) to tax gains from property transactions should be counted from the date of completion of the property and not from the signing of the sale and purchase agreement as what is being practised now.

This is given that it takes three years for high-rise residences to be delivered to buyers upon the signing of the sale and purchase agreement, and two years for landed property. Chang says the severity of the housing crisis for many Malaysians today calls for a workable housing delivery model to be put into action urgently before the problem spills over and cause more social problems in the country.

Housing the people has to be made the top thrust of the government and all possible measures need to be put to work fast and bottlenecks must be promptly addressed.

He says much more can be done to ensure a sustainable and orderly housing market for the people, stressing that holistic and concerted efforts need to be adopted.

“However, very often policies adopted are more for political expediency rather than for the betterment of the people.

“We need a single umbrella to monitor, regulate and police the performance of the various agencies that are entrusted with the role to ensure affordable housing index are met and properly distributed to the deserving ones. They must build the right quantity of the right property, at the right location, for the right populace, and at the right price.

“There must be full transparency on the location, number of units, registration and balloting process to ensure fairness to all eligible buyers,” Chang stresses.

A single database will enable individuals to learn about the availability of the affordable housing in their communities or in the communities they planned to move to, and understand financing options avail to them.

Siva also calls for a central planning and delivery agency to plan and coordinate all the affordable housing needs of the people.
“The whole process should be totally transparent with a master registry to record all the database of applicants and successful candidates. There should also be a moratorium period of up to 10 years to ensure that the successful candidates offered these affordable housing will not be able to dispose these homes for quick profit.

“The federal and state governments should provide the land and other forms of incentives to encourage private developers to lend their support for these affordable housing schemes,” Siva says.

Chang agrees that giving incentives to developers that build affordable housing will motivate them to throw in their support to build more of such housing units, adding that building up the infrastructure connectivity to the still relatively undeveloped areas will make these places more accessible and improve demand for property in those places.

“HBA has proposed to the government to take the lead by unlocking more of its vast land banks to build affordable housing for the people.

“The reason why developers are not chipping in to build more affordable housing units is because of the so-called profit maximisation by industry players. It is either high-rise multiple hundred units or high-end luxury units. Very often it is a combination of both - luxurious high-end units.I have not heard of developers building single-storey terrace houses that were so prevalent in the past. Developers are refusing to build such price and low margin items and will rather focus on higher margin items. With land being a scarce resource, developers will maximise the value of their land banks.

“If the land comes from the federal and state governments, private developers will be more willing to throw in their support to develop affordable housing for those in need,” Chang concludes.

Monday, 27 October 2014

Chinese President Xi Jinping's (C-R) meeting with the members of the Asian Infrastructure Investment Bank (AIIB) in the Great Hall of the People in Beijing, China 24 October 2014. 21 Asian countries are the founding members of the AIIB, an initiative by China. - EPA

THE launch of the US$50bil Asian Infrastructure Bank (AIIB) is a positive step for the development of Asia where large areas remain with looming infrastructure needs.

There has been good work done by other international bodies, but due to the vast financing needs of the region, there is always place for another major bank to put in the good work.

The AIIB was launched in Beijing last Friday at a ceremony attended by Chinese finance minister Lou Jiwei and delegates from 21 countries including India, Thailand and Malaysia, said Reuters.

It aims to give project loans to developing nations with China set to be its largest shareholder with a stake of up to 50%.

In a speech to delegates after the inauguration, Chinese President Xi Jinping said the new bank would use the best practices of the World Bank and the Asian Development Bank, said Reuters.

The authorised capital of the bank would be US$100bil; the AIIB would be formally established by the end of 2015 with its headquarters in Beijing.

There was a huge demand for infrastructure investment in Asia; the Asian Development Bank (AIIB) put that at around US$8 trillion of investment during the current decade, said the Singapore Business Times (SBT) in a report earlier.

A principal motive in proposing the AIIB was to invest part of China’s US$4 trillion foreign reserves in higher-yielding assets than US Treasury bills, said SBT, also quoting diplomatic sources.

In addressing the potential rivalry between the AIIB and other international aid bodies, one has to look at the big picture in what will benefit Asia in the long run.

If carried out successfully, infrastructure development across Asia will help narrow the gap between the more and less developed areas.

China is already in partnership with India to develop infrastructure and industrial parks in India.

Spreading its infrastructure investments over the rest of Asia would be a natural step towards that development.

After warning on excessive speculation in currency and debt markets, the Reserve Bank of India (RBI) is looking at the low hedging levels by companies and the currency risks they face.

If indirect pressure on companies via their bankers failed, the RBI may consider forcing companies to submit detailed financial information through their lenders, said Reuters, quoting bankers who met with RBI officials earlier this month.

The RBI’s warnings signalled its concern that unhedged firms could be a vulnerable link should global markets buckle, said Reuters.

The central bank had worked hard to build up its defences after India last year weathered its worst rupee crisis in two decades, said Reuters.

The RBI is keeping tabs on every aspect of companies’ exposure to currency risks.

After working hard to build up its defences on the rupee, the RBI would not want some other segment of the capital market to fail to keep pace.

The bosses at Royal Bank of Scotland (RBS), which is still under government ownership, were dealt an embarassing blow when their proposal to pay high bonuses was shot down.

The Treasury stopped RBS from paying some staff bonuses worth twice their salaries, said Reuters, quoting James Leigh-Pemberton, chairman of UK Financial Investments (UKFI) which controls the taxpayer-owned 79% of RBS.

UKFI had recommended that RBS be allowed to pay that level of bonus to retain staff and attract talent, said Reuters.

Retention of staff is a dicey issue when it involves banks that are still in the throes of reform.

It is a Catch 22 situation where these banks are still experiencing falling revenues and low share prices.

The situation will probably improve when these banks can reap the fruits of their revamp and get off the hook with government owning the stake.

Friday, 24 October 2014

The Occupy Central movement in Hong Kong has lasted more than three weeks. The Hong Kong Special Administrative Region government on Tuesday held talks with the Hong Kong Federation of Students. But given a lack of positivity on the part of the latter during the talks, it remains unknown when the Occupy movement will end.

The external political situation concerning Occupy Central is increasingly clear-cut. Western public opinion has given it full support. Besides, a mix of traditional forces that are confronting the current Chinese regime, including Tibetan, Xinjiang and Taiwan separatists, Falun Gong devotees, and pro-democracy activists, have beaten the drums for the Hong Kong protests like cheerleaders.

The Occupy Central activists and their adherents must wake up. They shouldn't act as a puppet of those hostile external forces.

With the Hong Kong radical forces becoming a new member, the anti-China camp seems to be expanding. If this is the case, it will yield terrible results.

Hong Kong, the Asian financial hub and a role model for the rule of law, will be held hostage by those hostile external forces, transforming into a battlefield between them and the rising China.

We suggest the Occupy Central activists not take on such a perilous role. Being already embroiled in the political competition in the Asia-Pacific region, they may have been pushed further than they originally intended.

The young Hong Kong students who have participated in Occupy Central should know that China, which is developing rapidly, is their home country and Hong Kong is a part of China's rise. They therefore enjoy more opportunities than their counterparts from a smaller country. Meanwhile, they have to accordingly take responsibility to safeguard China's security as it rises.

If the Occupy Central forces keep advancing, this will attract more international anti-China forces. The longer the protests last, the harder it will be for the Occupy Central forces to back down.

Incredible role reversals have often occurred throughout history. A marginal part or even central part of a camp could be converted into the enemies of that camp. We strongly hope the Occupy Central activities won't do so.

The West-supported external forces will continue cheering for Occupy Central. Exiles will take the Occupy movement as their chance.

Their aim is to strike a heavy blow against China and take it down, but is this the goal of the young student participants of Occupy Central? If not, they should withdraw from the protests as soon as possible.

And for a small number of hostile elements to China, the country knows how to deal with them.

- Global Times

Chinese community leaders in London blast HK protests

Leaders of the Chinese community in Britain on Monday called on protesters in Hong Kong to stop the Occupy Central movement and let things return to normal.

According to a statement issued by the London Chinatown Chinese Association, the Occupy Central movement has disrupted Hong Kong long enough and needs to be wrapped up soon.

The statement called for stability through the "one country, two systems" policy and continued successful economic development for the international financial capital.

Under Hong Kong's basic law and its top legislature's decisions, more than 5 million Hong Kong voters have a say in who will become the chief executive in 2017 through the "one man, one vote" electoral system, said Chu Ting Tang, chairman of the London Chinatown Chinese Association, at a forum on the Hong Kong situation in London's Chinatown.

Residents of Hong Kong, under the "one country, two systems" rule, enjoy freedom of speech, religion, education and employment, Tang said, adding that "residents can demonstrate in the streets, criticize the government, media and members of the legislative body and monitor the government without restriction".

Tang believes that Hong Kong residents have been enjoying prosperity from a thriving economy and that their standard of living has been improving year by year.

"Since rejoining the Chinese mainland in 1997, Hong Kong's status as an international center for commerce and trade has been strengthened. The employment rate has also reached an all-time high," Tang said.

Shan Sheng, president of the UK Chinese Association for the Promotion of National Reunification, noted that the Occupy Central movement has had a serious impact on the residents of Hong Kong by obstructing administrative operations.
The students among the protesters are young, some even not yet in their 20s, Shan said. Their understanding of politics is rather shallow.

Since being implemented in 1997, the policy of "one country, two systems" has been progressing smoothly in Hong Kong, Shan said, adding that real estate and the economy of Hong Kong have thrived.

The current protest movement is negatively influencing that development and the everyday livelihood of Hong Kong residents, Shan added.

Thousands of Hong Kong protesters, most of them students, joined the Occupy Central movement to express their discontent over the process set by the top legislature for electing the region's next leader through universal suffrage.

China's Hong Kong government on Tuesday held its first formal talks with students who have been participating in the Occupy Central movement since Sept 28.

The
Bridled protest: Hong Kongers' free will shall not be held hostage to
protestors. Pro-democracy protesters flash lights during a rally to
protest the violence seen in Mong Kok, in Hong Kong, China, 4 October
2014.

Rehda’s 2.6% estimate differs from that of the Customs Department, which expects the GST to have an impact of between 0.5% and 2% on house prices, assuming there’s no change in supply and demand conditions.

Ng said the association was in full support of the GST and concurred with Customs GST director Datuk Subromaniam Tholasy, who had said that land did not incur the 6% GST rate.

However, he said land was by no means the largest cost component in property development.

“As our calculation clearly spells out, the construction cost, which constitutes 46% of the total development, is not only the largest component but also the component which will attract the GST of 6%,” he said in a letter to StarBiz.

He said the GST on this component would inevitably lead to an increase in house prices.

Appending calculations for a housing unit originally priced at RM400,000, Ng said the price post-GST would be around RM410,560.

Under the 46% construction component, costs were broken down into non-service taxable and service taxable segments, representing 44%, or RM176,000, and 2%, or RM8,000, respectively.

Under the non-service taxable segment comes items such as cement/concrete, steel, bricks and sand, while the service taxable segment includes tiles and fittings/sanitary. Under the existing sales and service tax, no tax is imposed on the non-service taxable category, while the service taxable category has a tax of up to 10% imposed on it.

Post-GST, Rehda’s calculations showed that the non-service taxable cost had gone up to RM186,560, while the service taxable cost remained at RM8,000.

It maintained the same cost estimates for other items, including land (15% or RM60,000), infrastructure and pre-development works (10% or RM40,000), professional fees and marketing costs (6% or RM24,000), finance costs (6% or RM24,000) and profit (17% or RM68,000).

Ng said Rehda also disagreed with Subromaniam, who had said that developers could easily absorb cost increases as their margins were around 30%.

He said it was currently impossible for developers to earn up to a 30% profit, as most development costs were on the rise, along with various capital contributions and charges imposed on developers.

“On average, as tabulated in the calculation, developers, most of which are public-listed companies, are only making around 17% at best,” he said.

However, Ng said it was still too early to determine the actual house price increases post-GST, as Rehda was still in discussions with the Government and there appeared to be many more issues to be ironed out.

Property
prices to further rise in Malaysia, Credit Suisse predicts. Higher
selling prices does not necessarily mean bigger profits for developers
with Credit Suisse noting that developers' cost of doing business has
reportedly ...

JOHOR BARU: Young Malaysians are being declared bankrupt because they spend more than they earn, says Minister in the Prime Minister’s Department Nancy Shukri (pic).

This trend was worrying because most of them had just started working but already had debt problems, she added.

“This younger generation are supposed to be the next leaders. Instead, we have those who are already facing financial difficulties at a very young age,’’ she told a press conference after opening an information programme for young people at the Home Ministry complex at Setia Tropika here yesterday.

Quoting figures from the Insolvency Department, she said there was an increase in the number of young Malaysians being declared bankrupts in the past five years.

She said there were nearly 22,000 cases last year, an increase from about 13,200 in 2007.

Within the first six months of this year, more than 12,300 young Malaysians had been declared bankrupt. They include 3,680 women.

“On the average, 70.22% of the cases are men,” said Nancy, adding that most of them have outstanding debts of RM30,000 or more and could not afford to settle their dues.

She said the high bankruptcy rate among Malaysians at a young age mainly resulted from defaulting on instalment payments on car, housing and personal loans.

Nancy said there had been celebrities who were also declared bankrupt but most of them declined to seek assistance from the Insolvency Department.

She added that aside from the department, those who have problems managing their finances could seek advice from the Credit Counselling and Debt Management Agency.

Saturday, 18 October 2014

ONE can safely assume that the subject of money would be of interest to almost all and sundry. ABBA, the Swedish group, sang about it. Hong Kong’s canto pop king, Samuel Hui made a killing singing about it. Donna Summers, Pink Floyd, Dire Straits, Rick James and quite a few more, all did their versions of it.

Is money all that matters? The ‘be all and end all’ of life?

This will certainly be a fiercely-debated subject by people from both sides of the divide; the haves and have nots.
Just last week, my 12-year-old asked if the proverb Money is the root of all evil is true. Naturally, like most kids of his generation, he would not have a clue as to how difficult it is for money to come about. Or why, when it does come about, it has the power to make and break a person. To a Gen-Z kid, the concept of having to ‘earn’ money is somewhat alien. Simply because everything he ever needs and beyond is ‘magically’ provided for.

Forget about teaching this generation to earn their keeps, just expecting them to pick up after themselves is a herculean ask. But we are not here to talk about that, instead, is money really the root of all evil? Perhaps, the proper answer would be ‘the love of money is’.

Let’s see what sort of evil comes with this love of money. Top of mind would be corruption, covetousness, cheating, even murder, just to name a few. These, of course, are of the extreme.

What about at the workplace? How does the love of money or rather the lure of money affect the employment market? Let me take on a profession closer to my heart, the advertising industry. Annually, our varsities and colleges churn out thousands of mass communication and advertising grads. Of these, only a handful would venture into the industry. Where have all the others gone?

A quick check with fellow agency heads reveals that many have opted to go into the financial sectors as the starting packages are somehow always miraculously higher than those offered by advertising agencies. A classic case of money at work. For those who have actually joined the ad industry, some get pinched after a while because of a better offer of ... money, and more. (As if this is not bad enough, the “pinchers” are often not only from within the industry but are clients!)

The fact is there is absolutely nothing wrong in working towards being the top of one’s profession and getting appropriately remunerated for it. The problem starts when money is used as the all-powerful weapon to ‘buy’ people. Premium ringgit is often paid to acquire many of these hires, some of whom, unfortunately, are still a little wet behind the ears. Paying big bucks for talent is all right, as long as the money commensurate with the ability and experience of the person.

Case in point is if an individual is qualified only as a junior executive with his current employer, should he then be offered the job as a manager and paid twice the last drawn salary? All because some of us are just so short on resources.

Now, hypothetically, if this person was offered the managerial post anyway, would he be able to manage the portfolio and deliver what is expected of him? Would he, for instance, ask what he needs to bring to the table? After all, he has suddenly become the client service director and draws a salary of RM20k a month. Does he actually need to bring more new businesses, or what? We can call ourselves all sorts of fancy titles but the point is we have got to earn it. As they say, the proof of the pudding is in the eating.

Having served on the advertising association council for the past nine years and presiding over it the last two, it concerns me greatly to see the how money is affecting and somewhat thinning the line of qualified successors to the present heads.

The lack of new talents coming into the ad business is increasingly worrisome. Though it may look a seemingly distant issue to most clients, they must now take heed. The agencies are business partners and if there is going to be a dearth of talents it will surely affect the clients’ business in the near future. So rather than pinching the rare good ones from the agencies, would it then not be in the clients’ best interest to instead remunerate the agencies so to secure better and higher standards of expertise? Food for thought, eh?

Pardon me for being old school. I am a firm advocate of the saying that one should not chase money. First learn to be at the top of your trade and money will chase you. Then again, we are now dealing with and learning how to manage the present generation. A generation of young, smart, fearless, and somewhat impatient lot who may not be as loyal as their predecessors. A generation that loves life and crave excitement. Adventure is in their blood and ‘conforming’ is a bad word. And money, lots of it, makes the world go faster for them.

As elders, we need to look hard and deep into how to inculcate the right value of money in this new generation. These are our children. They are the future. If we make no attempt to set this right and instead keep on condoning the practice of over-remunerating them, we will be in trouble. The fact that Malaysia will soon have to compete in the free-trade region further allows money to flex its muscles more. I shudder to think what would happen to our young ones if we keep on mollycoddling them with the wrong idea that they ought to be highly paid just for breathing.

Folks, my sincere apologies if I have inadvertently touched some tender nerves but a wake-up call this has to be. For our dear clients, think about the proposition to review your agency’s remunerations – upwards I mean. This, over taking people from the industry, will save you more in the long run.

For those of us in the agencies, let us keep polishing up our skills and not let money be the sole motivator. If you are good, others will take notice. Work hard, the rewards will come. Just exercise some patience.

I leave you with a saying that one Mr Jaspal Singh said to me when I was a rookie advertising sales rep with The Star eons ago: “Man make money, money does NOT make a man”. (Or woman, of course.)

Till the next time, a very Happy Deepavali to all.

God bless!

By Datuk Johnny Mun, who has been an advertising practitioner for over 30 years, is president of the Association of Accredited Advertising Agents. He is also CEO of Krakatua ICOM, a local ad agency.

Friday, 17 October 2014

Teh(pic), 27, co-founder of Beulah International, strides proudly in the footsteps of her father, Datuk Teh Kean Ming, chief executive officer/managing director of IJM Corp Bhd, who has been in the construction and property development industry for over 35 years.

MELBOURNE: Adelene Teh, a second-generation Malaysian property developer, is quickly making her mark in the competitive property development market here.

Teh, 27, co-founder of Beulah International, strides proudly in the footsteps of her father, Datuk Teh Kean Ming, chief executive officer/managing director of IJM Corp Bhd, who has been in the construction and property development industry for over 35 years.

Teh, a graduate from the University of Melbourne with a Master’s degree in architecture, was born and raised in Malaysia.

“I fondly remember my father taking me for walk-throughs on project sites and explaining the details. I am proud of what he was doing,” he told Bernama.

She attributed much of her own interest in property sector to her father, whose dedication and passion have influenced her career path.

The prices range from A$360,000 to A$405,000 for one-bedroom units while two-bedroom units range from A$490,000 to A$745,000.

The estimated yields are between 4% and 6%.

In a recently-published article in The Age newspaper, Andrew Leoncelli, managing director of CBRE Residential Projects, said the location, perched high above Doncaster Hill and just 15km to Melbourne CBD, is a huge draw.

“Being high on the hill means amazing city and park views, while being directly adjacent to such a good shopping centre, with a host of luxury brands makes it an excellent prospect in real estate terms,” Leoncelli said.

Together with her partner, Jiaheng Chan, co-founder of Beulah International, they are the driving force behind the success of Gardenhill.

Malaysians will have the opportunity to attend and select the units at the KL Westin preview this weekend before the public Melbourne launch.

With already 30% of the units sold and scores of registrations before the public launch, Gardenhill is set to be a resounding success.

Like her family heritage, Teh’s property development skills have been well honed.

Thursday, 16 October 2014

In a 10-part series, the Malaysian Global Innovation and Creativity Centre (MaGIC), in collaboration with The Star’s Metrobiz section, explores what it takes to make a great startup ecosystem, beginning with an understanding of what startups are all about.

The Father of Modern Chemistry, Antoine-Laurent de Lavoisier once said that it is vital “to submit our reasoning to the test of experiment, and never to search for truth but by the natural road of experiment and observation.”

A startup’s journey is not very different, in that it is meant to run a series of experiments before it hits a growth path. According to Steve Blank, a Silicon Valley serial-entrepreneur who developed the Customer Development Methodology, “A startup is an organisation formed to search for a repeatable and scalable business model.”

But what is a business model?

A business model describes how your company creates, delivers and captures value. An entrepreneur is supposed to create a vision for a product that solves a real problem in the world, with a series of assumptions about all the pieces. Who are the customers? How do you sell to them? How do you price and position the product? How do you build and finance the company?

An entrepreneur’s job is to quickly validate whether the model is correct by seeing if customers behave as predicted. Most of the time they don’t. So entrepreneurs are supposed to tweak that business model until they find enough traction to grow into a sustainable company.

Once on a growth trajectory, a startup decides to enter new markets or create new product lines and eventually exits favourably, providing significant returns to investors or venture capitalists.

Like science experiments, a startup is meant to fail several times before it succeeds. It is important that we understand this in order to support local entrepreneurs who are looking to push the boundaries of innovation.

Jack Ma’s e-commerce company Alibaba Group Holding Ltd’s recent US$25bil (RM80.7bil) initial public offering on the New York Stock Exchange, which is the largest in history, proves that Asian entrepreneurs and markets are just as competitive and innovative as those in the US.World largest IPO: Alibaba shows ...

Another revered Silicon Valley figure, Y Combinator startup incubator founder Paul Graham describes a startup as, “a company designed to grow fast.” He goes on to explain that a startup does not have to be newly founded to work on sophisticated technology or to take venture funding. He emphasised that the only essential thing for a startup to achieve is high growth.

Without high growth, a company is categorised as the more common small- and medium-sized enterprises of mom-and-pop shops, professional services firms, manufacturers, brick-and-mortar businesses, or resellers. They typically grow at a steadier rate, require physical locations, more up-front capital (usually bank loans as opposed to private investments) and are not as scalable (can only serve a limited number of people based on human resource capacity).

The new startups of the 21st century are also admittedly different from the old-school startups of the 1970s, back in the early Microsoft, Oracle and Apple days. Today’s startups are a new breed that leverages the Internet and technology to scale across borders very quickly.

Startups such as Facebook, Airbnb, Dropbox, Pinterest, Uber and Spotify have all achieved billion-dollar valuations in a matter of three to four years.

This signifies that we are in a new era where entrepreneurs are able to very quickly create global products that permeate our daily lives. And these entrepreneurs can come from anywhere, not just Silicon Valley, which is typically the benchmark for startup and innovation ecosystems around the world.

Startups are the main job creators in the US economy, and similarly, it will become the primary growth engine for Malaysia as we seek to become a high-income nation by 2020.

As a nation that is trying to push its own innovation boundaries, we should come together and support our young entrepreneurs and enable them to solve some of the toughest problems in our country and beyond.

KUALA
LUMPUR: Prime Minister Datuk Seri Najib Razak has announced the
establishment of the Malaysian Global Innovation and Creative Centre or
MaGIC in Cyberjaya to encourage entrepreneurship among Malaysians.

KUALA LUMPUR, Oct 13 — Malaysia has a “severely unaffordable” residential homes market, with housing even more out of reach for its residents than in Singapore, Japan and the United States, according to US-based urban development researcher Demographia.

Demographia’s report was cited today in a report in Singapore’s Straits Times newspaper to highlight how many Malaysians continue to be locked out of the residential housing market despite the federal government’s attempt at helping first-time house buyers.

According to the ST report, Demographia rates housing as severely unaffordable if it is 5.1 times median annual income. Malaysia clocks in at 5.5x, higher than Singapore’s 5.1x, while housing in the United States and Japan is “moderately unaffordable”.

Government data cited by the ST report shows that since 2012 median monthly household income has risen eight per cent annually to RM4,258, slower than the average housing price increase of 10 per cent to RM280,886.

The country’s consumer price index has risen by an average of 3.3 per cent this year and Putrajaya had warned it may spike by 5 per cent next year, tripling the 2013 average.

In presenting Budget 2015 last Friday, Prime Minister Datuk Seri Najib Razak introduced a Youth Housing Scheme that will waive down-payments and subsidise ownership by up to RM10,000 for 20,000 married couples under 40.

Najib also said the government would provide another 80,000 new homes priced at RM100,000 to RM400,000 under the 1Malaysia People’s Housing Programme (PR1MA).

Both schemes, including the existing My First Home (MFH) scheme are only for households with a combined monthly income of less than RM10,000.

According to Bank Negara only a third of My First Home applicants received loans in the first year, as banks refused to take risks.

And PR1MA has seen just 761 buyers for the 160,000 units launched since 2013.

“We earn just over that but it’s not enough for savings. We can convert rent into loan repayments but we can’t pay the 10 per cent deposit,” lawyer Puteri Mohamad told the Straits Times in commenting on the Budget proposal to help households earning less than RM10,000 monthly to buy homes.

Office administrator Mimie Azriene Mohd Zin, 32, has no children but she and her technician husband have applied for a PR1MA home.

But she told the Straits Times they have not figured out how to afford the down payment on their combined income of under RM4,000 a month that leaves them with little savings living in expensive Kuala Lumpur.

“We might not even be able to afford the repayment but we have to try before prices go up further,” she told the daily.

Source: http://www.themalaymailonline.com/

Malaysia's budget aid brings little joy to house hunters

Despite being a partner in a law firm just outside Kuala Lumpur, Ms. Puteri Mohamad, and her fiance, can only watch as apartments in the area where she lives spiral above 500,000 ringgit (US$153,334).

When the government proposed measures in its 2015 Budget — released on Friday — to help households earning less than 10,000 ringgit (US$3,067) monthly to buy homes, she was not at all elated.

“We earn just over that but it's not enough for savings. We can convert rent into loan repayments but we can't pay the 10 percent deposit,” said Puteri, 33, who lives in a rented flat in Petaling Jaya.

Many Malaysians like her find themselves locked out by a combination of what U.S.-based urban development researcher Demographia rates as a “severely unaffordable” residential market and accelerating inflation.

Malaysia's consumer price index — which includes many subsidized goods — has risen by an average of 3.3 percent so far this year and the government warns it may spike by 5 percent next year, nearly triple the 2013 average.

Government data shows that since 2012 median monthly household income has risen 8 percent annually to 4,258 ringgit, slower than the average housing price increase of 10 percent to 280,886 ringgit.

Demographia rates housing as severely unaffordable if it is 5.1 times median annual income.

Malaysia clocks in at 5.5x, higher than Singapore's 5.1x, while housing in the United States and Japan is “moderately unaffordable.”

Prime minister Najib Razak said in his budget speech the government would provide another 80,000 affordable homes (priced at 100,000 ringgit to 400,000 ringgit) under the 1Malaysia People's Housing Programme (PR1MA) and introduce the Youth Housing Scheme that will waive downpayments and subsidize ownership by up to 10,000 ringgit for 20,000 married couples under the age of 40.

Both schemes, as well as the existing downpayment waiver under the My First Home scheme, are only for households with a combined monthly income of less than 10,000 ringgit.

The National Housebuyers Association lauded the moves to help aspiring homeowners in financing but criticized the lack of new measures to cool rising prices that are the root of the problem.

Its secretary-general, Chang Kim Loong, said speculators have taken advantage of the low entry cost of buying a property at the expense of genuine buyers.

Office administrator Mimie Azriene Mohd Zin, 32, has no children but she and her technician husband have been unable to even think of home ownership until these schemes came along.

They applied for a PR1MA home, which the government says is priced 20 percent lower than comparable units, worth about 200,000 ringgit three months ago.

But they have not figured out how to afford the downpayment on their combined income of under 4,000 ringgit a month that leaves them with little savings living in expensive Kuala Lumpur.

“We might not even be able to afford the repayment but we have to try before prices go up further,” she said.

That is, if she can get a loan in the first place. The central bank reported that only a third of My First Home applicants in the first year received loans as banks refused to take the risk.

Tellingly, even PR1MA saw just 761 buyers for the 160,000 units launched since 2013.

PUTRAJAYA: A wide net has been cast on those barred from leaving the country by the Immigration Department.

And it is not just tax offenders and those with criminal records who face a rude shock at border checkpoints or at the airport.

The latest figures show some 85,000 National Higher Education Fund (PTPTN) beneficiaries who did not repay their loans on the department’s travel blacklist.

They are among 1.14 million people on the list which includes 701,266 Malaysians.

The department has advised Malaysians to check their Immigration status prior to making holiday plans overseas to avoid problems.

“It is the responsibility of the traveller to first check if they are cleared to leave the country.

“It doesn’t matter if you are planning to leave by flight, road, rail or sea.

“As long as you are on the blacklist, you will not be allowed to pass the Immigration checkpoint, even if you have a valid flight ticket,” Immigration security and passport division director Ibrahim Abdullah told The Star.

As of Sept 3, the department’s overseas travel restriction orders included those who have been declared with outstanding debt issues. There were 277,693 such Malaysians named by the Insolvency Department.

Malaysians who have violated a foreign country’s immigration laws, such as by overstaying or abusing their travel visas, are also not spared.

Ibrahim said the countries concerned may bar the defaulters from re-entering the country and this information would be shared with the local Immigration department, such as Malaysia’s, which would then put the defaulter on a watchlist.

A total of 32,516 Malaysians were in this category for having overstayed in another country, alongside 115,803 foreigners who have similarly overstayed in Malaysia and are now barred from leaving the country.

“If any Malaysians on the watchlist try to leave the country, they will be stopped and taken in for an interrogation until it is satisfied that they will not commit the same act in another country again,” said Ibrahim.

Stubborn tax defaulters make up a sizeable group on the travel blacklist, with 135,111 persons named by the Inland Revenue Board.

The Star has reported on Aug 26 that defaulters will not be allowed to travel abroad until they have settled their tax obligations.

The treatment will be the same for those with outstanding issues with the Employees Provident Fund (EPF), such as those who failed to file their EPF contributions. There were 10,219 Malaysians and 532 foreigners listed under this category.

Another 133,314 non-citizens have been barred from leaving the country for having their citizenship revoked or application rejected by the National Registration Depart­ment.

This is on top of 88,830 foreigners who had entered the country illegally and have been classified under the Immigration’s Kes Tanpa Izin.

An unusual cluster of 210 Malaysians were also placed under this category which, according to Ibrahim, had referred to those who have been identified by the Home Ministry as having been involved in activities involving illegal foreign workers.

Several other categories were criminally-linked, including those under police observation (15,699 cases) and for drug-related charges (7,673 cases) or crime (5,090 cases).

There were also 4,953 Malaysians barred from overseas travel for violating Customs regulations.

To find out if you are barred from travelling abroad, one needs only to enter the MyKad number on the department’s travel status check portal at http://sspi2.imi.gov.my/

“If they have been barred, they must be present in person at the nearest Immigration passport and security division, where they will be told why they are not allowed to leave.

“This is to avoid identity abuse by a third party as we do not want private information to be divulged to an impostor,” Ibrahim said.Almost 85,000 PTPTN study loan defaulters barred from leaving Malaysia

PETALING JAYA: Almost 85,000 National Higher Education Fund Corporation (PTPTN) recipients have been barred from leaving the country to date.

PTPTN chief executive officer Agos Cholan said the corporation had to resort to barring the defaulters from leaving because they had been ignoring repeated reminders to repay their loans.

He said the corporation would send borrowers a reminder to begin repaying their loans six months after graduation.

“If there is no payment after two months, the first notice would be sent,” he said.

This, he added, is followed subsequently by a second and third notice if there was still no repayment.

Agos said after this, the corporation would send a legal notice and subsequently blacklist the borrowers.

To lift the travel ban, Agos said they would need to make some payment immediately, depending on their income.

“They would also need to sign papers committing to pay monthly instalments and arrange for a bank’s standing instruction or salary deductions. Restructuring is allowed if they wish to vary instalment amount,” he said.

Agos said the number had reduced from some 130,000 in 2007 who were barred.

Since Prime Minister Datuk Seri Najib Tun Razak’s announcement that borrowers could expect a 20% discount if they repay their loans in full by March 31 next year, Agos said there had been a few enquiries on the dates.

Najib, when tabling Budget 2015 last Friday, said borrowers who were unable to do so could still get a 10% off their loans if they made continuous payments for 12 months until Dec 31, 2015.

Borrowers were given similar discounts under the Budget 2013.

The travel ban is also imposed on 277,693 Malaysians listed under the Insolvency Department for failing to settle their debts.

Tax defaulters are also on the blacklist, with 135,111 persons named by the Inland Revenue Board.

Another 32,516 Malaysians who have violated laws in foreign countries, including overstaying, have also been barred from leaving the country.

Also blacklisted are 115,803 foreigners who have overstayed in Malaysia.

Immigration's security and passport division director Ibrahim Abdullah told The Star that as long as a person was on the blacklist, they would not be allowed to pass the Immigration checkpoint, even if they have a valid flight ticket.

"It doesn't matter if you are planning to leave by flight, rail, road or sea," he told The Star.

The report added that the travel ban will also be imposed on those with outstanding Employees Provident Fund issues, including those who had failed to file their EPF contributions. A total of 10,219 Malaysians and 532 foreigners are listed under this category.

Meanwhile, The Star also reported PTPTN chief executive officer Agos Cholan as saying that they had to resort to barring the study loan defaulters from leaving the country as they had ignored repeated reminders to repay their loans.

Agos had also reportedly said that to lift the travel ban, defaulters would need to make some payment immediately, with the amount determined by their income. – October 14, 2014.